FBR chairman admits weak uptake of fixed tax scheme for retailers
Only four new shopkeepers had joined Pakistan's fixed tax scheme for retailers by the statutory deadline, the Federal Board of Revenue chairman, Rashid Mahmood Langrial, told the Senate Standing Committee on Finance on Wednesday, conceding that the response had fallen below expectations. He said traders had defeated the government's good faith, and told the committee that glitches in the filing application were merely an excuse for not filing returns.
The scheme offers retailers a nominal 1% tax in return for complete exemption from audit and from the installation of point-of-sale terminals. Zubair Bilal, the FBR's member for operations, told the committee that 787 returns had been filed under the scheme, of which only four came from new filers. The FBR has said 10,338 retailers registered through the dedicated application within two months, covering traders with annual sales of up to Rs200 million, of whom 2,337 were new — but only a very few of those filed returns.
Bilal Azhar Kayani, the minister of state for finance and the scheme's main architect, said he expected momentum to build once the FBR began pursuing traders, and acknowledged technical glitches in the application launched to help first-time filers. He said penalties would initially be imposed in stages — Rs10,000 at the first stage, Rs25,000 at the second and Rs50,000 at the third — and that strong enforcement measures would have to follow if fines proved insufficient. Dr Hamid Ateeq Sarwar, the FBR's member for strategic transformation, said the government was targeting 500,000 to 1 million of the 3.7 million traders outside the system. Langrial said collection from traders could exceed Rs100 billion if the scheme succeeded and would be negligible if it failed.
The government extended the statutory date for filing income tax returns for tax year 2026 by 15 days to 15 October, citing requests from trade bodies and tax bar associations and problems caused by glitches in a system developed by Pakistan Revenue Automation Limited. The FBR said it had received 5.7 million returns against 19 million registered taxpayers. Zubair Bilal said the number of filers was 1.7 million higher than at 30 September 2025, while the total filed last year was 8.5 million.
The FBR said it collected Rs3.078 trillion in taxes in the July-September quarter of the current fiscal year, exceeding its quarterly target by Rs25 billion, though growth over the same period last year was 6.5%. Income tax collection of Rs1.432 trillion fell Rs52 billion short of the three-month target, sales tax of Rs1.14 trillion exceeded it by Rs85 billion, federal excise duty of Rs197 billion was almost equal to target, and customs duty of Rs312 billion was Rs8 billion below. The government and the International Monetary Fund have set an annual tax target of Rs15.263 trillion, requiring 17.4% growth, with approval of the sixth loan tranche contingent on meeting the first-half target.
